SK Hynix Makes Up Over a Quarter of South Korea's Stock Market. If You'd Invested $5,000 in the Memory Giant 5 Years Ago, Here's How Much It Would Be Worth Today.

Investors should always keep an open mind when looking for new investment ideas, whether that means exploring uncommon sectors or even countries they don't live in.

SK Hynix (KOSE: A000660) (NASDAQ: SKHY) is proof of that. The South Korean memory chip company has proven to be a key player in the artificial intelligence (AI) supply chain and has generated phenomenal gains for South Korean shareholders.

In fact, SK Hynix now accounts for over 25% of the Korea Composite Stock Price Index, South Korea's benchmark. If you'd invested $5,000 in SK Hynix five years ago (something U.S. investors would have had great difficulty doing until recently), here's how much you'd have today.

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Why SK Hynix stock has done so well

SK Hynix is not a new company, having been founded in 1983 as Hyundai Electronics. The company is one of the largest manufacturers of dynamic random-access memory (DRAM) and NAND flash memory, which have long powered consumer electronics.

This technology has become a key part of AI because DRAM and NAND chips play critical roles in feeding data to the general-purpose graphics processing units (GPUs) made by companies like Nvidia to train large language models (LLMs). As GPU clusters and data centers have scaled, so too has the need for DRAM and NAND.

NAND serves as permanent storage for data that GPUs can access at any time, such as operating systems and data sets. It's not as fast as DRAM, but it provides cheaper access to storage. DRAM is temporary storage, meaning the data is lost when power is off, but it's much faster and key to enabling GPUs to pull in as much data per second as they do.

Memory companies have historically been viewed as cyclical because whenever there is a surge in demand for DRAM and NAND, it takes time for memory companies to catch up, making it difficult to predict when the supply-and-demand balance will even out. Oftentimes, companies will ramp up supply too much, leading prices to eventually fall. However, Wall Street analysts believe demand for DRAM and NAND will be constrained for the next few years, leading memory prices to climb through 2027 and even potentially into 2028.

In the first quarter of 2026, SK Hynix held the second-largest market share in the global NAND and DRAM markets, with 18% and 29%, respectively. The company also reported record first-quarter earnings results. Revenue tripled year over year, while operating profit rose more than 400%.

Earlier this month, SK Hynix raised $26.5 billion in funds by listing 178 million American depositary receipts (ADRs) on the Nasdaq exchange under the ticker SKHY. Ten ADRs are equal to one share of the South Korean stock.

If you'd invested $5,000 five years ago

All the big memory companies have done incredibly well, and at one point, SK Hynix topped $1 trillion in market cap. According to Alphabet's Google, SK Hynix stock is up over 1,418% in the last five years. That means a $5,000 investment five years ago would be worth $75,900 today, crushing the returns achieved by investing in any major stock index.

Now, as long as memory remains in a supply crunch and companies like SK Hynix can maintain or even raise memory prices, the stock will do well going forward in both South Korea and in the U.S. There's also an argument that the AI supercycle could create a new environment for memory companies, leading to longer contracts and less cyclicality in these stocks.

I'd caution investors from getting too bullish and thinking that this cycle will be different. It could be, yes, but there's also a very real possibility that, while this cycle looks different, it ends the same way as in the past.

Betting too much on memory companies also makes investors beholden to the AI trade. Should the AI trade suffer a big setback or even roadblocks, stocks like SK Hynix could take a big hit.

That's why I wouldn't make SK Hynix too large a position in your portfolio right now. However, holding some exposure is certainly OK, as there could still be room to run for these stocks now and over the longer term.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.